Statistically, since 1989 till current 2010, BLR hit its peak at 12.27% in Year 1998 and touch its floor at 5.55% in Year 2009. Based on simple averaging, the number is 8.1%. Is it going to rise? Well... statistically, it might be.
Chart of historical BLR (1989 - 2010)
Intuitionally, BLR is a minimum interest rate calculated by banking institutions based on a formula which takes into account the institutions’ cost of funds and other administrative costs. And, BLR adjustment is quite dependent on the Overnight Policy Rate (OPR) from Bank Negara Malaysia and it is solely managed by individual banks, thus, BLR of each banks might differ from the others. Correlation between OPR and money market is positive and indirectly, BLR is positively correlated with money market. In a simpler manner, when the market is good, BLR is going to rise. Concern over here is that, how are we going to define market is good? Psychology of economics may be a good reference in this point, whereby, it tells us that market expectation will form the future market trend. In other words, if the whole Malaysian economy think we are going to be better and do it well, the possibility that BLR is going to rise might have a greater place.
The "common agreed" BLR is quoted at BLR = 6.3% for majority of commercial banks in M'sia, except for (1) Bank of Tokyo-Mitsubishi UFJ (Malaysia), (2) J.P. Morgan Chase and (3) The Royal Bank of Scotland Berhad. Attached image is the full list of BLR which quoted by individual banks as per end of Nov.
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